ISU economist: public works projects better than stimulus checks

Iowa State University economist David Swenson says "public works" projects that may be financed early in the Obama Administration are a better way to boost the economy than those "stimulus checks" the government sent out last spring.

Swenson says investing in "critical" infrastructure like roads, bridges, schools and systems that provide water and deal with sewage benefits the slumping economy, up-front, in a specific way.

"You stimulate the construction sector. That’s a sector that’s got a disproportionate amount of unemployment. You stimulate those suppliers into the construction sector. You send a signal to the market that capital development is going to continue for a while and you get a multiplier effect," Swenson says. "But — best of all — you get a pretty good bundle of public goods that everybody benefits from."

Swenson, though, says the federal government is limited in its ability to influence the economy. "I always tell people the economy’s so big and government’s so small and so government needs to have its perspective on exactly what it can do," Swenson says.

For example, congress and the president approved a $170 billion economic stimulus plan last spring which sent a check to most Americans. By comparison, some experts say the entire U.S. economy is worth over $14 trillion this year.